This year UF may see the largest increase in its utility bill ever, and since the state can no longer afford to foot the bill, it means UF will be forced to cut millions from its budget to keep the lights on.
Typically the state covers the cost of utilities - gas, water, electricity, etc. - for educational facilities at UF, but with the state short on cash and electricity rates rising, it has decided not to pay the increases this year, said Ed Poppell, UF's vice president for business affairs.
This fiscal year, the state is supposed to cover about $53 million of UF's $72 million utility bill. Some facilities, like dorms and Shands at UF, are not state-funded.
"We're short $8.3 million this year because utility costs have gone up that much," he said. "That's like a budget cut."
He said, to his knowledge, this is the largest percentage and dollar-amount increase in utilities over one year that UF has ever seen.
And next fiscal year, in 2009-2010, the increase is slated to be $3 million more, which means UF will have to find another $11 million to cut from its budget.
UF has already factored that amount into the $72 million to $75 million possible budget cut that UF President Bernie Machen asked colleges and administrative units to prepare for in January, said Matt Fajack, UF's chief financial officer.
But the $8.3 million shortfall UF is experiencing this year will have to be pulled from UF's reserves, Fajack said.
UF's reserves, which totaled about $80 million at the end of June, are used by colleges for things like lab equipment and emergency cash, he said.
He said UF's reserves are already lower than they should be. A presentation to the Faculty Senate in December revealed the reserves are equal to about 15 days of UF's operating expenses, which are about $1.3 billion a year.
Fajack said it would be better if the reserves could cover about 60 days of expenses.
He also responded to critics, like John Biro, president of UF's chapter of the United Faculty of Florida, arguing that UF should exhaust its reserves during budget cuts to prevent faculty layoffs.
This year is an example of why that is not such a good idea, he said.
"It works for one year but, unless (state) appropriations money comes back next year, we'd just have to lay them off next year," he said. "So all it does is save them a year."
And depleting the reserves would leave UF vulnerable if utilities were to spike again or if a hurricane hit, he said.
Several factors caused the rate increase.
Progress Energy, which sells electricity to UF, raised its rates by 28.6 percent starting in January to cover costs incurred from complying with new environmental standards, increasing fuel costs and the construction of a nuclear power plant. That increase followed a 4 percent increase over the summer.
Fajack said because fuel prices have come down, UF may be spared some of next year's potential utility increases.
But Poppell said the price of coal, used to produce much of the company's electricity, is still high because of demand in China.
Still, Poppell said UF is seeing positive results with its energy conservation efforts.
He said even though UF added many new buildings over the past year, including energy-intensive research facilities, campus energy consumption was up less than 1 percent.
